Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation:_____.

Sagot :

Baraq

Answer:

an inflationary spiral is likely to occur

Explanation:

If the government uses its stabilization policies to maintain full employment under conditions of cost-push inflation: "an inflationary spiral is likely to occur."

Given that the cost-push inflation is a form of inflation in which prices of commodities increases as a result of wages and raw materials cost increase, and stabilization policy is a means by which the government tend to sustain economic development with little changes in price.

Hence, when stabilization policy is used to maintain full employment under conditions of cost-push inflation there is a high tendency to result in a continuous rise in prices due to the cost of wages and materials increase.